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Asian markets up as chance of US rate rise eases

by June 7, 2016 General

HONG KONG: Most Asian markets rose on Monday while the dollar clawed back some of its hefty losses after last week’s soft US jobs report reduced the chances of an imminent interest rate rise, but the stronger yen hit Japanese exporters. The US Labour Department said on Friday that May saw the world’s top economy create the fewest number of jobs in six years, slashing expectations borrowing costs will rise any time soon.
Traders who had been expecting the Fed to announce a rise no later than July — with the central bank having hinted at such just last month — were caught off guard. The dollar was sent plunging two per cent against both the yen and the euro on Friday but made some minor headway in afternoon trading on Monday. The greenback edged up to 107.13 yen from 106.63 yen in New York but was still sharply down from levels above 109 yen before the jobs report. The euro dipped to $1.1357 from $1.1364 but was well up from the $1.1154 reached on Thursday.
“The slowdown in job growth in recent months must have put paid to any chance of a hike in interest rates by the Fed at its mid-June meeting,” said Richard Jerram, chief economist at Bank of Singapore. “A July rate hike is still possible but it would require a very strong June jobs report, reversing much of the slowdown of recent months. If the June report is inconclusive then the Fed might find it sensible to wait until its mid-September meeting.”
The yen’s rise hit Japan’s exporters, although afternoon buying pared early losses. The Nikkei closed 0.4 per cent down, having sunk more than one per cent in the morning. Shanghai ended 0.2 per cent lower while Hong Kong added 0.4 per cent and Sydney was 0.8 per cent higher.
The prospect that US borrowing costs will remain low for some time provided support to emerging markets, with Manila, Jakarta and Bangkok well up. Higher-yielding, or riskier, currencies also gained. South Korea’s won added 1.4 per cent against the dollar, Indonesia’s rupiah jumped 1.5 per cent and the Malaysian ringgit climbed one per cent.
However, the greenback rallied against the British pound after opinion polls at the weekend showed more people saying they will vote to leave the European Union in this month’s referendum. — AFP
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